The Philippine stock market on Monday shed more than a percent after major oil producers failed to forge an agreement at a summit in Doha, sending oil prices into further decline.
The benchmark Philippine Stock Exchange Index (PSEi) weakened by 1.06 percent or 77.90 points to end the day at 7,243.40, while the wider All Shares retreated by 0.99 percent or 42.48 points to close at 4,272.19.
Jun Calaycay, head of research and marketing at A&A Securities Inc., attributed the PSEi’s fall to the failure of major oil producers to come into agreement to slash oil production at a meeting in Doha held on Sunday.
“The biggest factor is that the Doha summit failed to come into an agreement to cap output and ease the global supply glut. Essentially, that development had a dampening effect on investors because they were expecting that a deal on cutting [oil]production would be forged, thus they lost a reason to be upbeat on the market,” Calaycay said.
Meanwhile, Jonathan Latuja, equity research analyst at Unicapital Securities Inc., agreed with Calaycay, saying that Philippine share prices slumped on the back of the failure of the Organization of the Petroleum Exporting Countries (OPEC) to reach an agreement to freeze crude output.
“Stock market slumped along with other global shares as commodities, led by crude oil prices, declined after OPEC members and other oil producers failed to reach an agreement to freeze output,” Latuja said.
In addition, Calaycay pointed out that concerns about political risks brought about by the forthcoming presidential election, regardless of its result, has sent the local bourse to the same level as during the 2004 and 2010 presidential elections.
“Historically, the stock market is relatively weaker whenever presidential elections are forthcoming and even immediately thereafter,” Calaycay noted.
In 2004 and 2010, the PSEi only increased by 9.5 and 9 percent, respectively during the first half of the year, he said.
“As of last Friday, the main index has gone up by 5 percent, and we expect to see only a 9 percent increase even after the oath-taking of the next president, regardless of the result.
But again, historically speaking, during the second half of the year, the main index in 2004 and 2010 after the elections recovered significantly and even enjoyed full-year gains of 20-25 percent and 37 percent respectively,” Calaycay said.
“The only difference is that we did not have an oil glut during those periods. Nonetheless, we are moving along that same path [as during the 2004 and 2010 presidential elections],” he added.
Total value turnover on Monday was low at P5.314 billion, with losers upstaging winners, 126 to 52, while 49 issues were unchanged.
All sub-indices shed points, with the property sector suffering the most, losing1.93 percent.